The technical outlook for FX trading on the Euro is still down.
The stabilization fund proposed the European Union and the IMF can succeed in the short and medium term, but doesn’t solve the underlying problem. Individual members have run too much debt and are having difficulty meeting their commitments. Lending them more money will not help in the long term.
Austerity measures are the most attractive solution, but difficult to implement on a scale sufficient to make a difference due to their inherent unpopularity.
In the end the outcome is likely to be a combination of austerity and inflation: from the Central Bank buying State and Government euro zone bonds. But don’t rule out a sovereign default.
Meantime, the Euro is on track with my expected Elliott wave count – being in an aggressive downward wave 3. I don’t use the wave count as a trading signal. I allow it to set a frame work for my trading. However, the signals and the wave count are both in sync – so its all systems – short!
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